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39Wal-Mart 2009 Annual Report
SFAS 157 establishes a three-tier fair value hierarchy, which prioritizes
the inputs used in measuring fair value. These tiers include: Level 1,
de ned as observable inputs such as quoted prices in active markets;
Level 2, de ned as inputs other than quoted prices in active markets
that are either directly or indirectly observable; and Level 3, de ned as
unobservable inputs in which little or no market data exists, therefore
requiring an entity to develop its own assumptions. As of January 31,
2009, the Company held certain derivative asset and liability positions
that are required to be measured at fair value on a recurring basis. The
majority of the Company’s derivative instruments related to interest
rate swaps. The fair values of these interest rate swaps have been mea-
sured in accordance with Level 2 inputs in the fair value hierarchy.
Hedging instruments with an unrealized gain are recorded on the
Consolidated Balance Sheets in other current assets or other assets
and deferred charges, based on maturity date. Those instruments
with an unrealized loss are recorded in accrued liabilities or deferred
income taxes and other, based on maturity date.
Cash and cash equivalents: The carrying amount approximates fair
value due to the short maturity of these instruments.
Long-term debt: Fair value is based on the Company’s current incre-
mental borrowing rate for similar types of borrowing arrangements
or, where applicable, quoted market prices.
Derivative nancial instruments designated for hedging: The fair values are estimated amounts the Company would receive or pay to
terminate the agreements as of the reporting dates. As of January 31, 2009 and 2008, derivative  nancial instruments designated for hedging
are as follows (asset/(liability)):
Notional Amount Fair Value
(Amounts in millions) January 31, January 31,
Derivative  nancial instruments designated for hedging: 2009 2008 2009 2008
Receive  xed-rate, pay  oating rate interest rate swaps
designated as fair value hedges $ 5,195 $ 5,195 $ 321 $ 265
Receive  xed-rate, pay  xed-rate cross-currency interest
rate swaps designated as net investment hedges
(Cross-currency notional amount: GBP 795 at 1/31/2009 and 1/31/2008) 1,250 1,250 526 (75)
Receive  oating-rate, pay  xed-rate interest rate swaps
designated as cash  ow hedges 462 — (17) —
Total $ 6,907 $ 6,445 $ 830 $ 190
Non-derivative  nancial instruments:
Long-term debt $37,197 $35,712 $37,862 $35,940
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities–Including an amendment of
FASB Statement No. 115” (“SFAS 159”). SFAS 159 permits companies to measure many  nancial instruments and certain other items at fair value
at speci ed election dates. The Company adopted SFAS 159 on February 1, 2008. Since the Company has not utilized the fair value option for
any allowable items, the adoption of SFAS 159 did not have a material impact on the Company’s  nancial condition and results of operations.